Goldman Sachs is advising credit investors to protect against losses amid expensive valuations and rising geopolitical turmoil. “The cost of hedging is the lowest it’s been in probably a very long time — use that to your advantage,” said Lotfi Karoui, the firm’s chief credit strategist. “Look at that left tail of the distribution — the known unknowns, the unknown unknowns, the things that can take you off guard,” he tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Robert Schiffman, in the latest Credit Edge podcast. Despite this, Goldman is positive on the corporate debt market outlook, given very strong demand for limited supply, and sees opportunities at the single name level. Karoui and Schiffman also discuss “absolutely remarkable” value in mortgage-backed securities, the default rate, private market relative value, downgrade risk from a forecast pick up in dealmaking and European bond opportunities.

<p>Goldman Sachs is advising credit investors to protect against losses amid expensive valuations and rising geopolitical turmoil. &ldquo;The cost of hedging is the lowest it&rsquo;s been in probably a very long time &mdash; use that to your advantage,&rdquo; said Lotfi Karoui, the firm&rsquo;s chief credit strategist. &ldquo;Look at that left tail of the distribution &mdash; the known unknowns, the unknown unknowns, the things that can take you off guard,&rdquo; he tells Bloomberg News&rsquo; James Crombie and Bloomberg Intelligence&rsquo;s Robert Schiffman, in the latest Credit Edge podcast. Despite this, Goldman is positive on the corporate debt market outlook, given very strong demand for limited supply, and sees opportunities at the single name level. Karoui and Schiffman also discuss &ldquo;absolutely remarkable&rdquo; value in mortgage-backed securities, the default rate, private market relative value, downgrade risk from a forecast pick up in dealmaking and European bond opportunities.</p>

The Credit Edge reviews the top credit news of the week and looks at the week ahead, with in-depth research of the most important corporate sectors, trends and themes. Analysis of specific corporate bonds and credit default swaps is backed by Bloomberg Intelligence's robust data sets and indexes.

<p>The Credit Edge reviews the top credit news of the week and looks at the week ahead, with in-depth research of the most important corporate sectors, trends and themes. Analysis of specific corporate bonds and credit default swaps is backed by Bloomberg Intelligence's robust data sets and indexes.</p>

The Credit Edge by Bloomberg Intelligence

Goldman Tells Credit Investors to Buy Cheap Hedges

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